7th pay commission: Will pay hike announcement come on August 15?

Last updated Aug 4, 2018

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As August 15 draws nearer, around 50 lakh central government employees wait for the salary hike announcement beyond the recommendations of the seventh pay commission. While there are several media reports claiming that Prime Minister Narendra Modi might deliver the good news in his speech from the red fort on August 15, the government in Parliament denied of any such possibility.

The Minister of State for Finance P. Radhakrishnan in Lok Sabha had said that the Prime Minister’s Narendra Modi government is not planning to give any hike in minimum basic salary beyond the recommendations of the seventh pay commission. Still, many believe that the government will oblige to the demands of employees before the 2019 general elections.

However, the expectations got a blow from RBI recently, when in its recent bi-monthly report RBI has raised inflation concern over revised House Rent allowance (HRA) and experts feel that pay hike might not come, keeping in mind the rising inflation and RBI’s observations.

RBI on Wednesday decided to increase the policy repo rate by 25 basis points to 6.5%. The reverse repo rate has been hiked to 6.25%, the RBI announced after its three-day Monetary Policy Committee (MPC) meeting.

“RBI’s Monetary Policy Committee has decided to increase the policy repo rate under the liquidity adjustment facility (LAF) by 25 basis points to 6.5% Consequently, the reverse repo rate under the LAF stands adjusted to 6.25% and marginal standing facility rate and Bank Rate to 6.75%,” the apex bank said in a statement.

Currently, the Central government employees are getting basic pay according to the fitment formula of 2.57 of the basic pay and if this big step is taken, it will come as a massive news for the Central government employees. Fitment factor is a figure used by 7th CPC with which the basic pay in 6th CPC regime (i.e Pay in Pay band + Grade pay) is multiplied in order to fix basic pay in revised pay structure (i.e 7th CPC). Fitment factor formulated by 7th CPC is 2.57.

Meanwhile, day to day work at the state government offices across Maharashtra may come to a halt as nearly 17 lakh employees will go on a three-day strike from August 7 to press their demands for the implementation of 7th Pay Commission report, the introduction of five day week and increase in retirement age to 60 years from 58. The call for the strike has been collectively given by the Maharashtra State Gazetted Officers Federation, the Maharashtra State Employees Organization, and the Maharashtra State Class Four Employees Association.

These unions have expressed serious displeasure over the state government’s dilly-dallying over the implementation of 7th Pay Commission recommendations citing that it awaits a report from a one-member committee headed by former bureaucrat KP Bakshi. The government has estimated that it will have to bear an additional burden of a whopping Rs 21,000 crore towards revised salaries and various perks based on the 7th Pay Commission.